Class 11-commerce NCERT Solutions Business Studies Chapter 10: Internal Trade

Internal trade is buying and selling of goods and services within the geographical limits or territory of the nation. The payment for such purchases is made and received in the domestic currency. Internal trade is classified into wholesale trade and retail trade.

Fixed-shop retailers are retailers who have a fixed place to sell their stock. They sell their products directly to consumers while being at the shop. They do not move from place to place to convince customers to buy from them.

Characteristics of fixed shop retailers:

1. They have greater resources which help them to operate at a large scale as compared to itinerant traders. However, sometimes they operate on a small scale too.
2. They deal in a wide range of products from durable to non-durable products.
3. They create greater credibility in the minds of consumers because of the various services offered by them such as home delivery, credit facility and guarantees for products. 

Wholesalers buy merchandise in bulk quantities from manufacturers and deliver them to retailers in smaller quantities for further selling to customers. Bulk order and purchase made by wholesalers entitles manufacturers to undertake large-scale production without having to worry about storage facilities as these goods are stored in warehouses.

Wholesalers are often in contact with retailers and customers. Hence, they are able to provide better information to manufacturers regarding customers' tastes and preferences, needs of customers, recent market trends and level of competition. This helps manufacturers to fulfil customers' demands and make tailor-made products to suit customers' requirements.

Wholesalers buy goods in bulk quantities from manufacturers and deliver them to retailers in smaller quantities for further sale to customers. During this process, they store the goods in warehouses and bear lots of risks and hence allow the manufacturers to produce on a large scale. Thus, wholesalers help manufacturers to take advantage of economies of scale.

On the basis of these differences, try to identify whether the stores in your area are single line or speciality ones.

Services are offered by wholesalers to manufacturers:

1. Facilitates large-scale production: Wholesalers collect various small orders from retailers and pass them to manufacturers. This enables them to produce various goods on a large scale, thereby helping them to take advantage of economies of scale.
2. Bearing risk: Wholesalers purchase large quantities of goods from manufacturers and store them safely in warehouses. However, this process exposes them to various risks such as fall in prices, theft, fire and spoilage. Thus, they bear the risk and relieve producers of the same.
3. Financial assistance: Wholesalers generally make payment of products purchased by them in cash. This helps manufacturers not to block their capital in stocks thereby providing financial assistance.
4. Expert advice: As wholesalers are in direct contact with retailers and indirect contact with customers, they are able to provide vital information to manufacturers regarding the taste of customers, their preferences, market conditions and various competitive activities. 

Services offered by retailers to wholesalers:

1. Help in distribution of goods: Retailers help in the distribution of goods in the sense that they sell goods to final consumers who are scattered over a large geographical area.
2. Collect market information: As retailers are in direct contact with customers, they play an important role in providing information to wholesalers regarding the tastes and preferences of customers and demands of customers.

Services offered by retailers to consumers:

1. New product information: Many new products are launched in the market every now and then. It is the retailers who make consumers aware of such products either through efficient display of products or through personal selling. This helps consumers to make the right decision with regard to purchase of goods.
2. Convenience of buying: Retailers generally have their shops located at residential places. This makes it convenient for buyers to purchase products at any point of time.  

Itinerant traders do not have a fixed place for doing business. They move from one place to another in search of customers. They are also called mobile merchants.

Reasons for the survival of itinerant traders:

1. They are small traders who sell their products at the doorstep of customers. In this way, they are able to give personal attention to customers.
2. They generally sell products of daily use such as fruits, vegetables, dairy products and toiletry products which are always in demand.
3. They emphasise on providing customer service. They do so by providing home delivery. They also provide credit facility to their regular customers.
4. They operate with limited resources and their cost of operation is also low. This helps them to sell products to customers at cheap prices as compared to large-scale retailers. 

A departmental store is a large retail store which offers various goods and services in separate departments fulfilling every customer's needs under one roof.

Features of a departmental store:

1. They tend to satisfy the needs of all customers, thereby saving their time and energy to purchase different products from different places.
2. They are specially located at central or well-known places so that they can attract a large number of customers to their stores.
3. They are generally formed as a Joint Stock Company managed by a Board of Directors, headed by a Managing Director, assisted by a General Manager and several sub-managers.
4. They combine the functions of retailing and warehousing. This is because they directly purchase products from producers and store the products at their own storehouses. As a result, the operational cost is reduced drastically. Also, it helps in eliminating middlemen between buyers and sellers.
5. All the purchases in the entire store are made centrally by the purchase division of the store. 

A consumer cooperative store is owned, managed and operated by consumers for their own benefits. It provides goods at reasonable prices to members of the consumer society. The main objective of this society is to provide quality goods and services at the lowest price possible.

Advantages which consumer cooperative stores have over large-scale retailers:

1. It is simple to form a consumer society. It can be easily formed when any 10 people come together to form a voluntary association and complete formalities and register themselves with the Registrar of Cooperative Societies.
2. The amount of shares held by the members of the consumer society depends on the liability granted to them. Thus, if a society's liability increases beyond the assets, the members will not be liable to repay debts using their personal assets.
3. Consumer societies are able to sell goods at lower prices as goods offered by consumer cooperatives are directly purchased from manufacturers and wholesalers, thereby eliminating the role of middlemen.
4. They operate at convenient public places wherein the members and others can easily buy products at any given time.
5. They generally sell goods on a cash basis; this reduces the requirement for working capital. 

Retail shops are shops where retailers sell their products to final consumers. Retailers are those who buy goods directly from manufacturers or wholesalers in bulk quantities. They then sell these goods to final customers in small quantities. Thus, they play an essential role because

1. Regular availability of goods would be hampered without them.
2. Customers would be deprived of choosing from a wide range of products which are provided by retailers.
3. Information regarding the new products is passed on by retailers to consumers allowing them to make important decisions regarding products.
4. They are generally located near residential areas and they remain open for long hours making it easier for customers to approach them.
5. They also provide after-sales services such as home delivery, credit facilities and more.

Consumers will face the following difficulties in the absence of retail shops:

1. Non-availability of goods at residential areas
2. No assistance in selecting a better product
3. No knowledge about the recent launch of new products
4. Absence of credit facility
5. Inconvenience to consumers in purchasing products of their needs 

Mail order houses are retail outlets which sell their goods through mail. There is no personal contact between buyers and sellers. They advertise their products through advertisements in newspapers, magazines and circulars to inform customers about the features and prices of products and terms of payment.

Usefulness of mail order houses:

1. Limited capital requirement: They require low capital to conduct business. This is because they do not need money to be invested in a building or any infrastructural facilitates.
2. Elimination of middlemen: They help in eliminating middlemen between buyers and sellers, thus saving money of both buyers and sellers.
3. Absence of bad debt: They do not provide credit facilities to customers. Thus, the chance of having bad debt with regards to non-payment of cash is nullified.
4. Wide reach: It has a wide reach as a large group of people can be served all across the nation having postal services.
5. Convenience: Customers get the goods delivered at their doorstep resulting in convenience to them.

Types of products handled by them:

• Graded and standardised
• Easily transported at low cost
• Have ready demand in the market
• Available in bulk quantities throughout the year
• Involved in least possible competition in the market
• Can be described through images